The German Chancellor has been put under pressure from the right-wing party Alternative for Germany after the devastating attacks on Tuesday. The German authorities have released their main suspect through the night, having previously suspected a refugee who was one of the one million refugees, Merkel granted entry to earlier this year.

The Chancellor announced only a few weeks ago, that she plans to stand for a fourth term next year, however recent events could start to have a major effect on her chances of success. Angela Merkel has been a major part of the Eurozone over the last 10 years, having an enormous influence over the direction of the EU. There would be significant market volatility towards the end of next year if Merkel wasn’t in the running and its likely a completely new party will be in power.

Italian banking crisis

The Italian Government are preparing a €20bn rescue package for lenders including the world’s oldest bank Monte dei Paschi di Siena (MPS). The bank has been headline news recently as it moves ever closer to being declared bankrupt. MPS have been trying to generate a private investment of €5bn however this is looking unlikely as they need to have the funds by the 31st December. If there isn’t an investment in place by then it will be up to the Italian Government to bailout the bank.

This will be the first test of new EU laws which suggest bond holders have to take a hit before a bank can be bailed out by the government. There is currently €2.1bn worth of MPS bonds owned by retail investors, which in many cases will be people’s savings. Considering the current resentment towards the EU amongst Italians, any further losses imposed on the population could start to shape the general election next year.

The European elections next year could change the political landscape in Europe, and have significant implications for the Euro. Those with a Euro buying or selling requirement could benefit from talking through their requirements with a currency expert. Call our trading floor on 01494 725 353 or email me here if youd like to learn more.

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